Help with HSA employer contribution confusion

[hankscorpio84]

I have an interesting situation regarding my HSA that I am hoping an accountant may be able to help out with. 

My employer contributes a portion of my insurance premium to my HSA throughout the year.  I'm not sure how to identify the plan name, but the result for 2016 was a $750/year contribution.  It is not a payroll deduction, and the plan does not allow payroll deductions.  There doesn't seem to be a way to identify if the HSA contribution comes from my insurance premium payment, or my employer's portion of the premium, or some combination of the two.  The HR person at my company seemed as puzzled as I when I asked where the HSA contribution was coming from.   

IRS publication 969 is very clear that maximum HSA contributions are $3350 minus any employee contributions, so for 2016 I can contribute $2600 to my HSA out of pocket, after receiving the $750 in employee contributions.  Publication 969, and the instructions for form 8889 to report HSA contributions also clearly state that employee contributions will be reported on form W-2 Box 12, under the code W.  My W-2 Box 12 has $3992.85 listed under code DD, which is "cost of employee-sponsored health coverage.  The amount reported with code DD is not taxable."  There are no other listings in Box 12.

Essentially my employer is contributing money to my HSA, but not specifically reporting it on the W-2.  Being one who does not want to cheat on taxes or get sideways of the IRS, I have limited my personal contributions to $2600 in order to keep total contributions under $3350.  Form 8889 only asks for employer contributions reported on the W-2.  If my company doesn't report the contribution, am I required to declare the contribution on Form 8889?  Can I get away with putting the full $3350 into my HSA in this case?

Ethically, I feel like I should just be happy to contribute the $2600 and be at the intended $3350 total contribution limit, but the more I can cram into the HSA the better, right?  Is there any risk to contribute $3350 and not report the employer contribution (that was not reported by the employer)?  Thanks in advance for any help.

[rainslie]

This doesn't directly answer your question, but there are 2 ways an employer can contribute to an HSA, either as a pre-tax withholding that gets reported in Box 15 under code W , or, through a Section 125 Cafeteria plan. This type of contribution withholds the amount from your box-1 Wages, so it lowers that number by the contribution amount of your pre-tax withholding and the employer contribution to the HSA.

I just went through this, because my employer reports it in box 15, but my wife's is a sec 125 plan. When a sec 125 plan, you can't count that as a 'contribution' because it's already lowered your box-1 wages.

[RWD]

My employer also did not include their contributions to my HSA on my W-2, but now they are issuing corrected W-2s to fix that. Is it possible your W-2 is incorrect?

[rubybeth]

Employer likely needs to revise W-2 and add code W for HSA contribution, even if the contribution was in addition to salary.  If they won't modify it, I would definitely report it. You should also get tax forms from the HSA provider: 1099-SA and 5498-SA. These should accurately reflect contributions and distributions.

[MoseyingAlong]

As rubybeth said, the employer contribution will be (should be) reported as a contribution in box 2 of the Form 5498-SA from.your HSA administrator. That's. the correct place.

[hankscorpio84]

Ok, thank you all for the responses, I really appreciate it.  I haven't received the documents from the HSA administrator yet, so hopefully they will show up as you all are describing here. 

[rubybeth]

Ok, thank you all for the responses, I really appreciate it.  I haven't received the documents from the HSA administrator yet, so hopefully they will show up as you all are describing here.

They might mail these, but with both my HSA and my husband's, we can login to the account online and see our forms now.

[BlueLesPaul]

This doesn't directly answer your question, but there are 2 ways an employer can contribute to an HSA, either as a pre-tax withholding that gets reported in Box 15 under code W , or, through a Section 125 Cafeteria plan. This type of contribution withholds the amount from your box-1 Wages, so it lowers that number by the contribution amount of your pre-tax withholding and the employer contribution to the HSA.

I just went through this, because my employer reports it in box 15, but my wife's is a sec 125 plan. When a sec 125 plan, you can't count that as a 'contribution' because it's already lowered your box-1 wages.

Sorry, but this information is incorrect.  Please see the language from W-2 and W-3 Instructions below.

Health savings account (HSA). An employer's contribution (including an employee's contributions through a cafeteria plan) to an employee's HSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes (or FUTA tax) if it is reasonable to believe at the time of the payment that the contribution will be excludable from the employee's income. However, if it is not reasonable to believe at the time of payment that the contribution will be excludable from the employee's income, employer contributions are subject to federal income tax withholding, social security and Medicare taxes (or railroad retirement taxes, if applicable), and FUTA tax, and must be reported in boxes 1, 3, and 5 (use box 14 if railroad retirement taxes apply), and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.

You must report all employer contributions (including an employee's contributions through a cafeteria plan) to an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from the income of the employee also must be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)

An employee's contributions to an HSA (unless made through a cafeteria plan) are includible in income as wages and are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Employee contributions are deductible, within limits, on the employee's Form 1040. For more information about HSAs, see Notice 2004-2, Notice 2004-50, and Notice 2008-52. Notice 2004-2, 2004-2 I.R.B. 269, is available at IRS.gov/irb/ 2004-02_IRB/ar09.html. Notice 2004-50, 2004-33 I.R.B. 196, is available at IRS.gov/irb/2004-33_IRB/ar08.html. Notice 2008-52, 2008-25 I.R.B. 1166, is available at IRS.gov/irb/2008-25_IRB/ar10.html. Also see Form 8889, Health Savings Accounts (HSAs), and Pub. 969.

https://www.irs.gov/pub/irs-pdf/iw2w3.pdf

See also Instructions from 8889

Line 9
Employer Contributions Employer contributions (including contributions through a cafeteria plan) include any amount an employer contributes to any HSA for you for 2016. These contributions should be shown in box 12 of Form W-2 with code W. If either of the following apply, complete the Employer Contribution Worksheet. Employer contributions for 2015 are included in the amount reported in box 12 of Form W-2 with code W. Employer contributions for 2016 are made in 2017. If your employer made excess contributions, you may have to report the excess as income. See Excess Employer Contributions, later.

https://www.irs.gov/pub/irs-pdf/i8889.pdf